BoG keeps policy rate unchanged at 14.5% for sixth time

The Monetary Policy Committee of the Bank of Ghana (BoG) has decided to maintain the policy rate at 14.5 percent for a sixth consecutive time.

The decision by the central bank follows a second meeting it held between March 17 to March 19, 2021 to review the economic developments of the country.

Explaining the rationale behind the policy rate decision, BoG Governor, Dr Ernest Addison explained that the 2021 budget has set fiscal policy on an adjustment path albeit slower than originally anticipated.

“The adjustment for 2021 is expected to be driven, mainly by revenue-enhancing measures, and to a lesser extent, expenditure rationalization due to the need to continue the stimulus programmes. The Committee assessed achieving the enhanced revenue targets and the heavy reliance on the domestic market as the main risks to the budget,” the governor explained.

“After declining in January 2021, headline inflation rose in February slightly above the upper band of the medium-term target, driven mainly by non-food prices. The Bank’s forecast, however, remain broadly unchanged with headline inflation expected to return to the target band in the second quarter of 2021,” he added.

Dr Addison further submitted, “Risks to inflation in the near-term are broadly balanced, but there are emerging short-term pressures emanating from the rising crude oil prices and the direct and secondary price effects of the revenue measures announced in the 2021 budget. Monetary policy would need to remain vigilant to monitor these risks.”

The Governor of the central bank added that the banking sector remains well-positioned to continue with the core objective of financial intermediation to support the ongoing recovery process.